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ABC Co. is considering a one-year project that requires an initial investment of $500,000; however, in raising this capital, ABC will incur an additional flotation
ABC Co. is considering a one-year project that requires an initial investment of $500,000; however, in raising this capital, ABC will incur an additional flotation cost of 2.0%. At the end of the year, the project is expected to product a cash inflow of $550,000. Determine the rate of return that ABC expects to earn on the project after flotation costs are taken into account.
Please show basic calculations. Thank you!
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